India’s ONGC Videsh Ltd (OVL), which is the offshore arm of Oil and Natural Gas Corporation Ltd, has indicated its willingness to make a new effort for the development of Iran's Farzad-B gas find.
According to a new report, which appeared on domain-b.com website on Monday, the new proposal prepared by the Indian company is more flexible with regard to cost recovery and capital expenditure, compared to a previous offer by the company, which was rejected by Iran.
Under the earlier proposed deal for developing the field, the capital return on investment was insufficient to attract investment.
The company was part of an Indian delegation, which visited Iran in mid-April to hold talks over new oil contracts with Iran.
During the visit, ONGC Videsh Ltd indicated its interest in developing Farzad-B gas field in the Persian Gulf waters.
The talks between Iranian and Indian officials centered on winning development rights to Farzad-B gas field and the possibility of setting up gas-based petrochemical/urea plant in Iran’s southeastern Chabahar Port.
A few days later, Iran announced that it had rejected the package proposed by the Indian delegation for the development of the field, citing years of dawdling over development of Farzad-B gas field by Indian companies as the main reason.
According to an Iranian informed source, speaking on condition of anonymity, India had offered a complete package for the development of Farzad B gas field, which included swapping the field’s gas with natural gas produced by other Iranian fields in Chabahar port, and construction of a pipeline to take the surplus gas of the field to India.
The Indian company offered its revised development plan for the field in 2010 according to which the company was expected to recover 60 percent of the field’s estimated gas reserves. However, it failed to live up to its promises when the United States and European Union imposed sanctions on Iran, banning any investment in Iran's energy sector above USD 20 million.
On July 14, Iran and the P5+1 group – the US, the UK, Germany, France, China, and Russia – reached the conclusion of negotiations over Tehran’s civilian nuclear program, with the Islamic Republic and the sextet sealing an agreement.
Based on the agreement, Iran and the six powers agreed that all economic and financial sanctions against Iran will be removed through a Security Council resolution. In addition, all bans on Iran’s Central Bank, shipping, oil industry, and many other companies will be lifted.
Farzad B gas field is estimated to hold 21.68 trillion cubic feet (tcf) of gas in place, of which 12.8 tcf is recoverable.